Analysis of Personal and Organizational Ethics - Research Paper Example

? Analysis of personal and Organizational ethics Introduction With progressive needs for ethical considerations for business development, several issues emerge that largely point to capitalism in business spheres. In a more concise and Elaborative manner, this paper discusses the capitalist business perceptions and ethical issues that dominate the business sector. Such an analysis is done in the context of personal and organizational ethics and values between non-for profit and for profit business organizations. To drive the thesis in this particular context, Goodwill Industries International and CarHop Automobiles are used as representatives of non-for profit and for profit business respectively to address the theory of decision making on the concept of morality within the consequalism and deontogical ethical orientations. Therefore, there is general agreement that for both profit and non-profit businesses must be socially responsible in considering ethical norms set by society. (Friedman, 1988) Good Will Industries International History and Rationale for existence In 1902, Dr. Edgar J. Helms, a Methodist minister and his associates thought of an idea of establishing a non for profit organization which later saw the birth of Good Will International Industries established in Boston in the same year. The then Methodist Minister took a burlap bag and headed straight to the wealthiest households of Boston requesting for charitable donations but not money. As people started recognizing the need for charity and giving, Dr. Edgar opened the stores and hired people occasionally when the need arose especially to assist in repairing of some of the damaged items and re-sale the donated products to convert them into monetary value. (Goodwill Industries International, 2012) Goodwill Industries International is a non for profit organization established in the year 1910 in a bid to assist individuals with disabilities, those who lack education or job experience or face challenges related to employment. Goodwill Industries achieve its program objectives through training of these identified individuals for careers inside their corporation so that they are provided with equal employment opportunities. Later in the years, Helm visited Morgan Memorial Cooperative Industries and Stores, Inc where he learned various innovative approaches that were used in the organization, which then inspired him to start using Morgan’s innovative approaches to doing in its programs and started a local industry at Brooklyn called “Goodwill Industries” employing improved techniques to Morgan’s business. Within the very many years that have marked its existence as a non-for profit organization, Goodwill has generated $4 billion in revenue. In his own statement Helms characterizes Goodwill as an “a multidimensional program that provides for the industrial needs as well as a social program, providing employment, training and also rehabilitating people who have limited access to employment, and replenishing resources to underprivileged persons in the social set up” (Goodwill Industries International, 2012) In the foregoing context, Goodwill Industries operates on a mission to “enhance the dignity and quality of life of individuals and families by strengthening communities, eliminating barriers to opportunity, and helping people in need reach their full potential through learning and the power of work”. According to Goodwill, 2012 webpage, the organization envisions a society “where every person has an equal opportunity to achieve his/her fullest potential and participate in and contribute in all aspects of life.” To order to achieve the aforementioned vision, Goodwill recognizes the value of respect, stewardship, ethics, learning and innovation. Rationale for existence The organization started by providing programs at Brooklyn in most lacking social service with regard to employment. However, it soon became evident that similar situations were also experienced in other parts of the country, hence forming the organization’s decision to expand to other parts of the city: now, Goodwill has over 165 branches in the United States and Canada with another 14-affiliated outlet opened in other cities around the globe. In these branches and outlets world over, Goodwill participates in assisting the elderly, veterans and young adults. Additionally, the organization assists some of the kids back in the classroom and provides with jobs as well along the way. The ethical dilemma Goodwill is a non-for profit organization, that enjoys tax exempt from the government. While annual revenue and sales of Goodwill has increased tremendously over the years, there seems to be emerging questions relating to the usage of this revenue. Occasioned by high sales revenues hitting $4.43Billion, and an estimated 2, 650 retail stores, Goodwill purport to offer training and employment opportunities to 4.2Million people with an estimated 82% of its revenue spent on the organization’s programs. What the organization does not make clear is that all its programs are generating revenue to the organization with most of its revenues going into paying lucrative executives while the non-management earns correspondingly less. Since the idea is premised on getting into employment those that are unable to find jobs, the working conditions in the Goodwill are described as “requiring a unique kind of a person” issues to do with dusty conditions, poor ventilations and harassment by the clients feature prominently in the organization-working platform. (Goodwill Industries International, 2012) Moreover, Goodwill Industries is a non-for profit organization, thereby its board of directors is not entitled to any benefit or compensation from the bank. Equally, through contracted work and partnerships who are listed as providing job training and placement for employees who are disadvantaged, on the opposite side, this instead forms a source of cheap labor to these firms. (PRNewswire, 2012) An analysis of above issues relates to Consequentialism. The consideration in this case is an ethical action that has eventually been the greatest good for as many people as possible. This is the most democratic ethical theory and is widely adopted across organizations and nations where a democratic system is well developed and equality is considered a fundamental right. Company Analysis for Car-Lots General Industry analysis of BHPH business Buy Here Pay Here (BHPH) describes a type of car-lot that does its financing and holds the loan in house payments that would be made there. To the present day, some of these dealers charge up to 30% of interest to maximize the profits on a car. The focus of BHPH is loaning persons who cannot get sources of financing from other financial organizations. Historically the concept of BHPH originated around 1970s during the times when there existed crisis concerning the loaning and savings coming in as an alternative to access quick credit that would otherwise not be getting from other financial institutions. Even with the reported crisis in the financial sector, the automobile dealers navigated a way of selling their car lots with the low-income situation that many persons found themselves. The role of BHPH dealers in the economy is multidimensional especially given the difficulties experienced by people in buying cars. While a car has almost become a necessity to the average citizen, owning a car on the contrary becomes difficult due to high unemployment rates that then translate to difficulty in accessing credit. The BHPH offers the clients the required vehicle and a mechanism to credit tailored to enable people a car. The mutual agreement between a dealer and a customer establishes a sustained long-term relationship between the two parties where the customer pays for the car for a pre-determined period during which the dealer is able to fix all the problems associated with the care at the dealer’s own cost. (FDIC quarterly, 2009) However, this model is significantly more expensive than traditional credit. The BHPH heavily relies on banks, government grants, and private investors as sources of financing their activities for selling consumer tailored automobiles. Company profile: Historical and Rational for existence Carhop Auto Sales and Finance was opened in 1996 in Lincoln, Nebraska, operating a single commercial store and three workers. The origin of CarHop was premised on helping people own a car with a market niche for poor people or those who did not have access to credit in owning a car. Since its inception, CarHop has grown to a dozen shop outlets in the United States operating on the Buy-here, Pay-Here business concept. This growth has since seen CarHop company operate a total of 14 retail stores in fourteen states serving close over thousands of customers on a monthly basis who then drive about 39milion miles a month. (CarHop, 2012) Rational for existence CarHop Auto Sales and Finance operate in a BHPH business matrix with a business vision of “Helping people drive. Changing lives.” With this, the idea of CarHop targets those customers with less than enough credit or none at all. Then they are approved for a vehicle choice that matches their financial requirement and convenience. Also included in the sales package, the company provided its customers with an 18month, 18,000 mile warranty and a compelling three-day customer satisfaction guarantee. Over the period of car purchase, the company offers its customers an opportunity to improve on their credit so that the customers can take advantage of other life necessities and chances. Ethical dilemma While CarHop has pioneered itself in assisting the poor in getting credit reputations and earning a car, an analysis of the model of the business points out that the company falls within deontology ethic. As one may be tempted to ask the type of moral actions that are required within the business context, an understanding of the right actions requires one to consider Act Consequentialism (AC), which provides the right action is the one that produces the desired social value. Deontology as an ethic contrasts the AC argument and suggests that the production of goods is not the major fundamental moral in consideration and that business may be required or at times allowed not to maximize that good. Thus, the ethic considers a categorical necessity in which a moral principle is required by rationality in order to proceed ethically. (Brook, 2007) A company operating from this scope would produce something that is integrally positive, positive for the customers. For example growing fruits and vegetables and sell them in the organic market. The employees would be local residents and would treat customers more as friends than just customers. They would be sustainable and produce ecological packaging, solar energy and without the introduction of contaminants. Using the same line of thought, CarHop operates a friendly credit program that enables poor people own cars to conform to the moral norm. While it is appreciable that the system enables poor people get cars, an analysis of the approach is generally more expensive than the traditional credit method. The friendly way of treating customers ensures that they stick with the company for whatever amount of money the BHPH charges, and what qualifies their choice to own a car given their credit inability to own one is an urge to conform to the moral norm, in this case of owning a car. Reflection prompts #1: Goodwill Industries While the previous discussions suggest a Consequentialism ethic, several issues emanate with regard to the origin and handling of the ethical issue. Before an opinion can be made whether the occurrence of the ethical dilemma was a company making and its handling, it is essential to consider the theoretical and philosophical arguments for consequentialism. From a theoretical framework, consequentialism theorists argue that actions are to be assessed on moral ground when looking at the affairs they lead towards. The proponents of these actions must specify that these choices are intended to bring the good and that they are desirable from a moral perspective. The consideration in this case is an ethical action that is the greater good for as many people as possible. This is the most democratic ethical theory and is widely adopted across organizations and nations where a democratic system is well developed and equality is considered a fundamental right. (David, 2005) The intention to create a non-for profit organization from Helms point of view was morally justified and his endeavor to assist those not in employments was an action that would justify this moral act as it sought to improve the living conditions and reduce poverty from poorer families and those who could not secure an employment. The events that led to the occurrence of the ethical dilemma however, cannot be morally argued and cannot be conclusively related to consequentialism in totality, and thus it was because of unforeseen force operating within the social complexities of the program. Reflection Prompt #2: Car-Lots On the other hand, a deontological ethic as witnessed in the case of Carlots is purely a creation of the profit organizations. In contrast to consequentialism theory, deontological ethics advance the argument that morality of actions is judged differently with their effects. In essence, the theory postulates that irrespective of the good morals that an action result to, the actions cannot be judged based on these moral outcomes. (David, 2005) On recalls of morality, business cannot justifiably make commit wrongful acts even if such acts would reduce the level of wrongful decisions. The strongest argument here is that what qualifies a decision is its compliance with the norm, and that the right supersedes the Good, and that if a case goes opposite to the right, it minimizes the chances of it being implemented irrespective of the Good that it portends. Thus, a company operating from this scope would produce something that is integrally positive, positive for the customers. For example growing fruits and vegetables and sell them in the organic market. The employees would be local residents and would treat customers more as friends than just customers. The case of Carlots in very many dimensions suggests that the acts were not well intended. The company has had a desire to make money; it therefore qualifies the ethical dilemma as a business responsibility issue where the creation of cheap routes to own cars by the poor constantly leads them into paying more. Further, the owners of BHPH are well aware that people will tend to own cars not because it is morally right to do so but the societal compliance demands one to do so. In the same fashion, the creators will be responsible in restoring the situation but they choose not to be guided by the profitability associated with the businesses and a continued credit limitation of the socially poor to access traditional credit in buying cars. Critique of the company’s actions Barry (1997) argues that an ethical situation from a business standpoint refers to a delicate situation between humans in their acts or decisions and its effects on other persons or a group of such. What comes out when one interferes with these ethical considerations are resulting in the business sense. Both the ethical theories, deontological and consequentialism human actions are driven by results of a certain nature. However, there seem to be variations in how this result should be achieved from the two theories with each theory suggesting a different approach in achieving the desired results. (Barry, 1997) The highly publicized business frauds in major organizations globally negate to lack of ethical responsibility from both non-for profit and profit making organizations. While some of these ethical dilemmas might be naturally created in the process doing business, the business management itself to present a friendly picture of the success of the business or to take advantage of the emerging opportunities in the business circle indeed intentionally commits some of them. According to consequential ethics, the outcome of a business determines the ethical appropriateness of that particular action. Stroh et al (1996) in their proposition of “Agency theory” claim that the theory seeks to address how top business managers influence the outcome of an organizational process towards what the business owner desires. It explains how agents manipulate the situation with little harm to satisfy self-interests. The balance is achieved when the agent is rewarded heavily by the owner of the business when meeting the interests of the owner, a case observed in Goodwill. However, problems start to arise when non-profit ventures pursue profit interests, impairing functioning of the consequential approach and infringing on the others’ rights. Critique of Car-Lots On the other hand, when business owners operate their ventures solely on gaining their personal wealth and business outlook, and negate the interest of the environment, or customers, then capitalism suffers an ethical trounce. It therefore follows that self-interest in the business environment with particular focus on profit-making ventures should be addressed by morals. The classical example provided in this discussion by the Car-Lots business suggest that the extent to which a business owner can achieve his desires and self interest without interfering with other’s interests is a business ethic is found in an ideal situation. If for a larger extent that the ethical Right is what determines the limitations of virtually all things that can be considered morally good, then the elemental basis of the business ethics can only be explained by arguments of deontogical proponent, Immanuel Kant. Emanating from his arguments, Kant (tr. 1996) defines right as the sum of conditions upon which voluntary acts of an individual can be equalized with those of other people in the society according to universal laws of freedom. (Kant, 1996) At the center of ethical concerns regarding how humans relate to each other lies with the issue of justice, which defines the minimal acts of ethical acts in the business. Injustice or wrongful acts are met when action of an individual surpasses the boundaries of right as stated above. Using the above analysis of Car-Lots and their business approach in advancing credit to afford cars, a deontological evaluation of the BHPH and deontological verdict ought to keep the business owners within the boundaries of legality, but also ethically acceptable and justifiable. In conclusion, there seems to be not only set limits to how businesses should run but equally important is no need for misleading people in the business process. These limits are set in the same manner that humans generally decide the right choice, and that ethics dictates everything whether consequential or deontological ethics within the social context. References Barry, N. (1997). Business, Ethics and the Modern Economy. Retrieved October 29, 2012, from Sir Ronald Trotter Lecture, 1997, Wellington: http://www.nzbr.org.nz/documents/speeches/speeches-97/business-ethics-and-the economy.pdf Brook, R. (2007). Deontology, Paradox, and Moral Evil. Social Theory and Practice , 33 (3), 431-440. CarHop. (2012). Retrieved October 29, 2012, from http://www.carhop.com/ David, C. (2005). Oxford Book of ethical theory. USA: Oxford University Press. (2009). FDIC quarterly. Cornell University. US: FDIC. Friedman, M. (1988). The Social Responsibility of Doing Business is to increase its profits. In T. Beauchamp, & N. Bowie, Ethical Theory and Business (pp. 55-60). Englewood Cliffs, NJ: Prentice Hall. Goodwill Industries International. (2012, October). Retrieved October 29, 2012, from http://www.goodwill.org/ Kant, I. (1996). The Metaphysics of Morals. New York: Cambridge University Press. PRNewswire. (2012, August 29). United Business Media. Retrieved October 29, 2012, from Goodwill® and ZIPS® Dry Cleaners Renew Partnership on Successful Will2Work Clothing Drive: http://www.prnewswire.com/news-releases/goodwill-and-zips-dry cleaners-renew-partnership-on-successful-will2work-clothing-drive-167827195.html Stroh, L. K., Brett, J., Baumann, J., & Reilly, A. (1996). Agency Theory and Variable Pay Compensation Strategies. Academy of Management Journal , 39 (3), 751-767. Read More